A US-based anti-piracy company is preparing to send cash settlement demands to Canadian file-sharers via their ISPs, all without a need for complicated court orders. Speaking with TF, law professor Michael Geist says that it might not all be plain sailing.

Despite clear indications that the best way to discourage people away from pirate sources is by offering legitimate content at a fair price, this carrot is still being rejected in favor of the stick.

Companies such as Voltage Pictures favor very big sticks indeed, suing tens of thousands of file-sharers for thousands of dollars each, both in the United States and Canada.

US-based Rightscorp, on the other hand, favor a smaller stick, sending settlement demands to alleged file-sharers for relatively smaller amounts per infringement. Until recently they were confined to the United States, but all that is about to change.

In a move to expand its business model north of the border, Rightscorp has retained Susan Abramovitch, a partner at Gowling Lafleur Henderson LLP, one of Canada’s largest lawfirms. Based in the company’s Toronto office, Abramovitch is described as a leading entertainment lawyer covering disputes in the music, film, television and videogaming industries, among others.

Rightscorp says that Canada represents a new market for its business model and an important step in the company’s international expansion plans. Implying that settlements are now accepted practice in Canada, the company references the recent Voltage Pictures case involving Teksavvy, which saw the ISP ordered to hand over the details of 2,000 alleged file-sharers.

However, while the Voltage case resulted in protracted legal argument and was ultimately subjected to court-ordered constraints, Rightscorp’s settlement demands are designed to circumvent controversial disclosure issues. Alleged infringers are reached via settlement notices attached to regular DMCA-style notices forwarded to them by their ISPs.

In the US, Charter Communications passes on Rightscorp cash demands, but Comcast does not. Will Canadian ISPs comply?

To get a broader idea of how this kind of business model might play out in Canada, TorrentFreak spoke with Canadian law professor Michael Geist.

“Canada has established a notice-and-notice system that allows rights holders to have their notices forwarded to subscribers. However, that system has yet to take effect,” Geist told TF.

“At the moment, there would be no legal obligation on the ISP to forward the notice to the subscriber, though that is likely to change in the coming months.”

When that notice-and-notice system does take effect, Geist says that Canadian law may specify the form notice letters must take.

“The law already identifies specific information to be included in the notice. There is no reference to settlement information or legal demands. If the Canadian government objects to [Rightscorp’s] approach, it could use regulations to stop the inclusion of settlement demands in notice letters,” Geist explains.

“Even if it doesn’t, there will be a question of whether the notices are in the proper form if they include information beyond that found in the statute.”

Since local ISP Teksavvy is at the core of the Canadian Voltage Pictures case, TorrentFreak spoke with the company to gauge its reaction to the news that Rightscorp might soon come knocking. Stopping short of an official comment on the business model, the ISP essentially echoed Michael Geist’s sentiments.

“TekSavvy would be within its rights to insist, and would insist, that any notice conform with Canadian law and not over reach the stated guidelines,” the ISP told TF.

Clearly, the main idea of the Rightscorp notices is to generate revenue for both the company and rightsholders, but in passing the notices on ISPs are also incurring costs, which raises other issues.

“The notice-and-notice law permits the government to set a fee for sending a notice that an ISP can charge. At the moment, it does not look like the government will establish a fee, preferring to wait to see how the system develops. Were this [business model] to come to Canada, the government might face increased pressure from ISPs to allow them to charge for their participation in the process,” Geist concludes.

TF approached Rightscorp lawyer Susan Abramovitch who did not immediately respond to our request for comment. The signs are, however, that she could be busy with this work during the months to come.